Organizing Insurance Policies and Records

Insurance records take up space and are rarely used. Why is it so important
to keep your insurance records on hand then? The truth is that sometimes
we’ll need to produce insurance records with very little notice so that we
can protect ourselves and our loved ones.

Insurance certainly is a crucial part of modern life. Your stuff, your well-being,
and your loved ones all need protecting against the unexpected. Aside from
claims information, most insurance policies don’t generate a huge amount of
paperwork. Since insurance records are really important pieces of paperwork,
you need a solid system for keeping it all organized.

A General Rule Of Thumb

All of your original policies, regardless of the type of insurance, should
be stored in a safety deposit box or fire safe. You may certainly keep copies
in your everyday files for quick reference – but the originals require a higher
level of protection. Just be sure to let anyone who would need access to these
policies (should something happen to you) know where they are stored. You
can put the monthly/quarterly/annual premium bill in your “paid bills” folder,
to be cleaned out at the end of each year.

Health Insurance Records

If you’re like most people, you get a pile of paperwork from your insurance
company every time you have a doctor visit – explanation of benefits, a bill
from the medical office, notices from your supplemental insurance programs,
etc. But what they all boil down to is determining who pays for what. With
that in mind, there are only 4 reasons to keep heath insurance records for
more than the current tax year:

because you are in the middle of filing a claim

because you have a dispute over a bill

because you take a medical tax deduction

because you need to prove that you have met your deductible for the year

Set up one folder labeled “current claims” for those items that are still
in process. Clip all the documents relating to a procedure or visit together
as they arrive in the mail, and store them in this file until you have heard
from all parties involved and gotten your final bill.

This way you can review everything at once to make sure there are no mistakes
or miscalculations. If you are satisfied with the final result, you can pay
the bill and file the stack in your permanent “completed claims” folder. If
you have a question or concern, you can move the stack to your “claims to
dispute” file, to be dealt with accordingly. Separating your paperwork according
to the stage of the process prevents confusion about what has been paid and
what hasn’t.

Medical Reference Files

If you manage to rack up enough out-of-pocket medical expenses to warrant
a tax deduction, you will need to include your claim records and medical bills
with your supporting tax documents for that year. These files will be kept
for 6 years, in case you are audited by the IRS. If you have not, any completed
claims can be purged from your files in January, when your deductible calculation
starts over for the new year.

Life Insurance

These days many of us have multiple life insurance policies. We might have
one through work, a couple of private term life policies, some life insurance
annuities, and even those “freebie” accidental death and dismemberment plans
that come with your credit card or bank accounts. The easiest way to organize
these is to simply place all of your policies in one “life insurance” file
and store it in your safe deposit box or fire safe. You can put the annual
premium payment notice in your “paid bills” file.

Property Insurance

You may have your property insurance policies – car, home, umbrella, etc.
– with several different companies. Unless there is a strong reason for doing
this, it is better to consolidate them all under one provider. Not only will
you receive better rates, but your paperwork will be drastically reduced.
Your company may even lump all of your policies together in one document each
year. Be sure to keep your original policy, the current year’s amendments,
and any claim information in your safe deposit box. Again, the premium payment
notice is stored in your “paid bills” file.